Eligibility for affordable housing

cheshirelabrador

My local council website says to be eligible for 'discounted for sale':

• you must be able to show you cannot afford the property at its current open market value, but can afford the property with the discount applied.

And as supporting evidence you need:

• A signed, letter-headed statement from a financial advisor accredited by the Financial Conduct Authority (FCA). The statement must confirm that you cannot afford the property at the full open market value and could only afford it at the discounted price.

Does anyone know what this means in practice? I mean if someone has a £10,000 deposit and they might be accepted for a 95% mortgage, does it mean the property value must be over £200,000? 

K_S

@cheshirelabrador Could you share the link so I can see what exactly it says? I haven't come across this myself but it sounds like a letter from an FCA regulated mortgage adviser (essentially anyone that can arrange a residential mortgage).

I suppose in effect it means that your income needs to fall within a certain narrow band with respect to mortgage affordability (as per lender calculations).

cheshirelabrador

@K_S I copied the relevant parts so there isn't exactly much more on there regarding eligibility, except the council's definition of who can claim a local connection.

https://www.cheshireeast.gov.uk/housing/affordable_housing/affordable_housing.aspx#DiscountedForSale

The neighbouring council, Cheshire West, have specific criteria on their website.
https://www.cheshirewestandchester.gov.uk/residents/housing/accessing-affordable-housing/discounted-market-sale

However, Cheshire East seem to have decided that it's based on whether a FCA regulated advisor says you can afford it or not.

kingstreet

The assessment takes into account income/affordability as well as deposit.

It's simple to work out the maximum loan and once the deposit is added, the maximum purchase price.

This is standard practice for shared ownership and discounted open market value (DOMV) schemes.

cheshirelabrador

kingstreet said:

It's simple to work out the maximum loan 

Using what formula? If I use HSBC's mortgage calculator it says I could get a loan of 4.5 times my income but if I use Barclays it's just 3.5 times.

simon_or

cheshirelabrador said:

kingstreet said:

It's simple to work out the maximum loan 

Using what formula? If I use HSBC's mortgage calculator it says I could get a loan of 4.5 times my income but if I use Barclays it's just 3.5 times.

Or even perhaps 5.5x with Nationwide/Aldermore, 6x+ with Kensington/Habito, etc

kingstreet

cheshirelabrador said:

kingstreet said:

It's simple to work out the maximum loan 

Using what formula? If I use HSBC's mortgage calculator it says I could get a loan of 4.5 times my income but if I use Barclays it's just 3.5 times.

Add the deposit to each lender's calculator output. You are not going to get the same from every lender. Expect differences. Ignore income multiples.

simon_or

kingstreet said:

cheshirelabrador said:

kingstreet said:

It's simple to work out the maximum loan 

Using what formula? If I use HSBC's mortgage calculator it says I could get a loan of 4.5 times my income but if I use Barclays it's just 3.5 times.

Add the deposit to each lender's calculator output. You are not going to get the same from every lender. Expect differences. Ignore income multiples.

So can the OP just pick a bank that suits the number that they need to meet the condition?

If that's the case then will the Mortgage Adviser give them a letter based on that lender and not what they can actually borrow if they looked at all lenders?